Glaxo Pays $90 Million to Settle States’ Avandia Claims

By Jef Feeley and Catherine Larkin -
Nov 15, 2012

GlaxoSmithKline Plc (GSK), the U.K.’s
biggest drugmaker, agreed to pay $90 million to settle claims by
37 U.S. states and the District of Columbia that the company
illegally promoted the Avandia diabetes medicine.

The settlement resolves claims by state attorneys general
that Glaxo misled consumers about whether Avandia caused heart
attacks and strokes to pump up sales. The company already has
paid more than $3 billion to resolve government probes of its
marketing of Avandia and other medications, as well as patient
lawsuits over the diabetes drug.

“This settlement, which is covered by existing provisions,
marks an important step in resolving long-standing legal
matters,” Bernadette King, a U.S.-based spokeswoman for the
company, said in an e-mailed statement.

The settlements are part of London-based Glaxo’s push to
resolve legal issues stretching back more than a decade. Company
officials agreed in July to plead guilty to misdemeanor criminal
charges and pay $3 billion to settle U.S. criminal and civil
investigations into whether Glaxo illegally marketed Avandia and
other medications. One of the criminal charges stemmed from the
company’s failure to properly report clinical safety date about
Avandia, according to court filings.

The company also agreed to pay more than $700 million to
settle patients’ claims that Avandia caused heart attacks and
strokes, people familiar with the accords said last year.

‘Holds Accountable’

The settlement with the states, which requires Glaxo to
make changes to the way it discloses and uses safety data about
its drugs, “is tough, fair and it holds GlaxoSmithKline
accountable for how the company marketed Avandia,” Tom Horne,
Arizona’s attorney general, said in an e-mailed statement.
Arizona will get more than $3 million under the accord, he said.

Six states -- Louisiana, Mississippi, South Carolina, Utah,
New Mexico and West Virginia -- opted out of the multistate
accord, King said. Other states declined to participate without
seeking compensation, she said.

“The company chose to settle the matter to avoid the
expense and uncertainty of protracted litigation and trial,”
King said in the statement. “The company did not admit to any
wrongdoing or liability of any kind under these states’ consumer
protection laws in this settlement.”

Under the accord, Glaxo is barred from making false or
misleading claims about any diabetes drug and must ensure that
safety claims are supported by “substantial evidence or
substantial clinic experience,” Catherine Cortez Masto,
Nevada’s attorney general, said in an e-mailed statement. The
state is receiving more than $1.5 million as part of the deal.

Promotion Halted

During the next eight years, Glaxo also must post summaries
of company-sponsored safety studies about diabetes drugs, Masto
said.

The company said in 2010 it would stop promoting Avandia
worldwide after regulators said the treatment would be withdrawn
from the market in Europe and sales would be limited in the U.S.
because of studies linking the drug to increased risks of heart
attacks.

Glaxo said last year that it took a $3.5 billion charge to
cover expenses linked to investigations and suits over Avandia
and other drugs. The reserve brought to more than $6.4 billion
the amount the drugmaker has set aside for legal costs tied to
Avandia and other drugs, such as its Paxil anti-depressant.

The federal criminal case is U.S. v. GlaxoSmithKline LLC,
12-10206, U.S. District Court, District of Massachusetts
(Boston).